Excerpted from Kevin Carson:
“Cooperatives offer immense potential to influence social change. But the cooperative model is not without its inherent complexities, and those engaging the cooperative sector must not be naïve; the cooperative can be gamed for the benefit of a select few at the expense of larger member-owners.
The board governance model of the cooperative is a mixed blessing. The board can insure the cooperative maintains its adherence to the cooperative principles, or the board can become captured by manipulative, ineffective board members. This is not to say that cooperatives are particularly prone to such disruption (remember, corporation, nonprofits, and city governments all utilize board governance structures), but to reinforce the point that with all institutions, they can become corrupted and ineffective. The cooperative, theoretically, serves as the ideal business model, bridging social connections and providing access to human capital and community resources. However, a scathing policy essay(25) from Congressman Jim Cooper (D-Tennessee) damning the cooperative electric utility sector demonstrates what might be facing social activists.
The New Deal policies that created what we now know as the modern day electric power cooperative, tasking the individual co-op to provide high quality services at the lowest possible prices; legally this is the only way in which cooperative electric utilities differ from their corporate counterparts. This means that regulation, not the cooperative principles, takes precedence in the day-to-day activities of the cooperative. The member-owners are then oftentimes excluded from open board meetings, which have led to evidence of rampant corruption.
The closed nature of many electric cooperatives prevents the member-owners from regulating the business. It is estimated for example that instead of returning dividends to the member-owners that electric cooperatives are hoarding cash. Congressman Cooper estimates that some $31 billion in dividends (profits) are being held in reserves, allowing cooperatives to pay exorbitant executive pay, and lavish board member compensation.
While Congressman Cooper is attempting to draw attention to the abuses of the cooperative sector, those of us who see the cooperative model as empowerment have a real opportunity to shift these abuses into positive community development. More to the point, why can’t the member-owner base mobilize to open up those opportunity structures necessary for cooperatives to be responsive to the member-owners and flourish?
First, member-owners should mobilize amongst themselves to make their cooperative act in a truly democratic manner, in sync with the cooperative principles. That means educating member-owners about the services the cooperative provides and, most critically, about the complexities of the industrial sector that the cooperative is embedded within. Such a practice provides the member-owners with the tools needed for them to become enlightened participants, cooperative entrepreneurs, and act as non-state regulators.
Second, an active member-ownership can also work with cooperative associations to ensure that at the larger-scale levels (state and national), the sector persistently reminds the individual institutions of their foundations in the cooperative principles. Indeed, the one legislative action that the cooperative sector could undertake is a comprehensive “cooperative bill of rights.” The purpose would be to codify into law the definition of what a cooperative is as defined by the International Cooperative, not by disconnected technocrats. This would not solve the problems of cooperatives that act like corporations, but no doubt would help to reinvigorate cooperatives by freeing them of the corporate legal structure and placing them in a legal structure of their own making.
Engaging cooperative membership for a broader vision would breathe renewed life into the cooperative sector. We begin to remind cooperative members, as well as the boards and executive staffs, why it is they exist in the first place. These densely connected networks are readymade to distribute vast amounts of knowledge and information swiftly. If we can free the cooperative sector from unnecessary regulation designed to privilege the corporation, we can lay bare the system of artificial privilege that has hindered community capacity to not only provide for themselves, but also to create a world of work with actual meaning.
Get involved in your local cooperative. Understand the existing cooperative culture, and work to reengage your individual cooperative with other cooperatives regionally. Read over those bylaws and understand your institutional rights as a member-owner. If the board or execs don’t budge, run for a board spot and take direct control.
Cooperatives represent one of the best examples of latent capacity ready to be engaged for true social change. Remember, there are over 700 grocery coops (300+ are looking to come online), 900+ electric utility coops, 400+ telecom coops, and 7000+ credit union coops; there is a lot of opportunity to make these individual shops into a tangible movement and create a real counter economy. Can we make it happen?”